At about 40 seconds in he begins to talk about the detail of the tuition fees policy. Note first of all that he does not apologise for voting for tuition fees: far from it. He apologises for saying in advance he would not. That's ridiculous: that appeases no one whilst making him look incompetent.

And then he proves he is just that. His reason for saying he should not have made a commitment to block tuition fee increases was "there was just no money around". And that's not treue for all sorts of reasons.

But it's not just the fact that it's clear the money was available if only the right choices on investment had been made and Clegg had decided that enriching future genrations was more important than boosting current corporate profits and bonuses. The second problem is that the claim that somehow student loans save the government money is just bogus. It's wrong. It's a lie. The loans students take out to pay their educational establishment are lent to them by the government. That's because the loans are provided by the Student Loan Company that says it's a "a non-profit making Government-owned organisation set up in 1989 to provide loans and grants to students in universities and colleges in the UK".

So let's get this right: the government lends the student loan company money that it has borrowed from the markets so that the student loan company can lend that money to students so that students can pay it to government owned universities for their education to reduce the supposed cost of the government supplying those students with their education. But right now however you look at it, the government is actually paying for that education by borrowing. It's just, potentially, making the students responsible for one day repaying that loan. That's all the student loan arrangement actually does. It passes the buck for repayment, that's all. Nothing though avoids the fact that right now student's aren't paying for the education: the government is. And all that means is that there was all the money needed to pay for the education students are having now and it was available because the government was willing to borrow for it, and actually is doing so. Therefore Clegg lied. Or is so daft he doesn't realise the truth.

National debt is supposedly just over £1 trillion. Net of quantitative easing, which will never be redeemed, it's about £650 billion or so. That difference is important here though: other parts of the deficit have been paid for with QE. That's what QE is really about: QE does in effect write off government debt so it will never have to be repaid by future generations. That's the case because repaying this debt is meaningless now: the debt is owed by the government to the Bank of England which is owned by the government and repaying a loan you've made to yourself is irrelevant: you can, or not, at your own leisure because no cash really changes hands.

But whilst that's true of most of our deficit spending that's been QE funded , as a result of Clegg's decision, based on his belief that "there was no money" when very clearly there was a great deal of it available, students are now going to be forecd to repay debt for current spending when the vast majority of us will never have to do so because QE has already written the part we've befitted from off.

So, Clegg's decision was not just a mistake: it was a callous act to impose debt on people unnecessarily and to burden them for life when for just a few £billion more on QE, which would have made no different to markets, inflation or anything else, none of that debt burden would have been needed.

The result is that we can really say Clegg got it wrong. More than that though we can say he got it spectacularly wrong. And he is still either too incompetent to know why, or too disingenuous to admit the truth. Either way, that apology is a hollow joke that cruelly exposes the economic incompetence of the deputy prime minister.

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The effect of this extra payroll tax (because for the vast majority of graduates, who will not earn very high salaries when they leave, this is what the new student loans effectively are) will be to suppress the take-home pay of 40% of the population for decades to come. Combine this with already stagnant wages, and we’re talking about an extra, completely unnecessary brake on the economy.

Compare this with the alternative – a significant but not huge investment of £3bn to 4£bn a year, for what is effectively the world’s most cost-effective Higher Education system, to keep students both off the dole and out of debt, and to create access to university for rich and poor alike.

Yet another decision taken by this government which can either be seen as seat-of-the-pants policy making and truly baffling (to be kind), or calculated and contemptuous (to be realistic)…

Bishop Peter Selby (former Bishop of Worcester, and the Church of England’s named Bishop for prison policy, and more importantly, President of the Christian Council for Monetary Justice – see http://www.ccmj.org/) made the acute observation at the CCMJ AGm two years ago that the whole funding of University education had been shifted from grants to loans as a measure of social engineering and political control.

Students on grants threatened the establishment in the 1960’s, whereas students now, saddled with this level of debt will “keep quiet, keep their heads below the parapet, and ask no questions”. To their credit, students ARE still questioning, and forming a significant part of organizations such as “UK UnCut”, but we should be in no doubt that this is part of this Government’s malign education policy, which aims at complete privatization and commodification of the WHOLE state maintained system by 2015, with every school either an Academy or a Free School, and all of them part of “for profit” chains.

Gove’s attack on the principle of free education, to be replaced by for profit indoctrination (in their own fevered idea of society = neo-feudal bondage for 99% and total freedom for th 1%) is every bit as dangerous as the dismantling of the NHS, without any significant opposition, or even apparent recognition by the “chatterati”, who swallow Gove’s constant undermining of the real improvements in education that took place under New Labour. I’m no fan of New Labour, but here they really did bring about imporvements, all of which Gove is now seeking to rubbish. As for Clegg – alas, he’s little more than the codpiece on the ConDem’s organ of shafting – an unnecessary addition – as demonstrated by Richard’s excellent anlytical post.

Even if Clegg was right, he’s wrong. I agree with you by the way – transferring the debt from the govt, which is long term & can be helped by QE to individuals where it is short term and damages the economy is bad practice. But even if it was cost effective from a hard economics perspective, the impact it will have on the sector is damaging because of the psychology of it. I’ve tried to explain this here: http://nogoodreason.typepad.co.uk/no_good_reason/2012/09/prospect-theory-the-panopticon-of-debt.html
Individuals will perceive it as current debt and act accordingly – either avoid it (bad for HE) or reduce it (bad for society). It’s the lack of real planning (and honesty) that is so shocking.

Richard, I am pleased that you have discussed the issue of student debt. I doubt very much that Clegg fully understands the concept of the national debt and like many others he confuses debt with deficit. Student debt will significantly impact on the economy in the future. Previously many graduates secured reasonably well paid jobs in the public sector and were able to enter the housing market. This route will now be closed and house prices will be affected. This of course might be welcome in some areas but I doubt very much that housebuilders will be encouraged to develop their landholdings if there are fewer first time buyers in the market.
As for Clegg’s ‘apology’ does he really believe that the electorate will now accept this and move on – young people’s trust in politicians was severely dented by his behaviour and cannot be restored by his video performance which is actually based on a lie. These political elites continue to behave in the most patronising manner.

Your economic analysis is spot on, Richard. But the political dimension is also fascinating and surely becoming ever more embarrasing for anyone of a Lib Dem pursuasion to live with.

First, and most obviously, Clegg is, from a presentational perspective, now the Mitt Romney of UK politics (Cameron and co are his ideological bedfellow, obviously). I don’t need to say anything more on that.

Secondly, what we now have is an emerging ‘tradition’ within the coalition for the Lib Dems to apologise for the nastiness and/or unintended consequences of policies, or (supposedly) having to take tough decisions (because that’s what government’s do!). While we hear no apologies (apart from trying to flog off forests) from Cameron and co, despite, as Toynbee and Walker lay bare in their analysis of the work of the ConDem government so far, numerous broken promises by Cameron and co (e.g. no top down NHS reorganisation, etc. etc, etc). That almost all of these is as significant as the Lib Dem’s over tutition fees but still attracts no apology says a great deal about the nature and approach to government of the two parties and of the real, underlying (as opposed to media presentation) relationship between them.

Which brings me to my third, and most important point. It was apparent from the outset of this government that the Tory strategy was to use the financial and economic crisis as cover to drive through a raft of policies that the electorate would not vote for and they have no democratic mandate for – in true ‘shock doctrine’ style.

Additionally, as its become increasingly evident that they are only going to be in government for one term (not least because they now realise that the state of the economy means they cannot use a tax giveaway before the next election to bribe people into voting for them) they’ve also decided to implement as many policies as they can that undermine every aspect of the social democractic state that they object to. The intention is clear: if sufficient progress can be made with the wrecking agenda before 2015, or the coalition collapses (and I suspect Tory strategists are working on the basis of the latter not the former) it’ll be very difficult for any government to subsequently rebuild what’s been destroyed. Note that a common side effect of this apporach to government (visible in, for example, Russia in the 1990s), is that policy making and implementation is not cordinated or ‘joined-up’, often resulting in contradictory aims/objectives – and highly negative outcomes.

It’s here that the Lib Dems have now painted themselves into a corner, for they seem unable or unwilling to see this is what the Tories are up to (perhaps some of them support this approach), and that for the last year at least (from the outset I’d say) all their presence in government represents for Cameron and co is an exercise in legitimation. To still claim at this stage that it’s a brake on Tory excesses is, to be frank, laughable.

Clegg’s latest apology is simply another example of the process of legistimisation at work. As such, it does nothing to repair the destroyed trust of the electorate in the Lib Dems, but it does transfer all of the blame for this policy (and by implication many others) onto the Lib Dems, while further providing the space for the Tories to carry on with their underlying ideological project.

From a Lib Dem perspectives, what a shambles! From the perspective of many of the ordinary citizens of this country, what a disaster!

@Martin. On the lack of honesty, we’re in agreement, but not on the lack of planning. More & more we seem to be seeing a re-play of 1979-81, with Thatcher’s malign economic experiment acting as a trial run for Reaganomics.

Now we effectively have a trial run for the Romney-Ryan madhouse, based on Grover Norquist’s aim to “shrink the state till it can be drowned in a bath!”. This IS the underlying Tory aim – it IS planned.

We must hope & pray Romney loses, soon to be followed by the Coalition, because a Ryan/Cameron axis (and Ryan would be the Dick Cheney of a Romney Presidency) would be the economic equivalent of “nuclear winter”.

(Am on my Blackberry just now – will read your posted article when I’m back at my laptop)

Not paranoid at all, Martin. Andrew’s absolutely right that much of what we see happening politically (and many of us regard as unacceptable) is planned. The response of right wing trolls and apologists that we are indulging in conspiracy theories when this is highlighted is itself simply a smokescreen.

Possibly the loan system was brought about to limit the political fallout surrounding the ability of all EU members citizens to the same treatment as UK citizens. This may have had all kinds of impacts including a larger flow of students from the EU into the UK.
Issuing currency or monetising debt, everything else being equal, would be reflected in higher inflation. That said its small beer out of £375 billion and counting.

i disagree with tuition fees (it discourages people from entering Uni and thus decreases the amount they might earn in their futures (which of course would be taxed).

But I wonder how many students arent actually taking the loans to pay the fees, some will be getting the cash from parents savings…………whcih is actually good for the economy as its being “spent” – not sure whether anyone has ever done any analysis on how much this might be, or the amount of students paying fees versus those taking a loan?

If you make the argument, as the Lib Dems and Tories do, that if the coalition didn’t do what they did in 2010 then the UK government borrowing rates would be like Greece, where does the UK having it’s own currency fit into that story? The Tories say it is best to be out of the Euro, but that we are effectively in the Eurozone without their austerity. And the Libs want to be in the Eurozone and, and…fill in the blanks here.

As for the tuition fees debacle, see Stefan Collini’s two articles at the London Review of Books (no subscription required), particularly ‘From Robbins to McKinsey:The Dismantling of the Universities 25 August 2011’ and ‘Browne’s Gamble, The Future of the Universities 4 November 2010’. He did the maths, and you can see which subject areas are up for the Tory chop.

At the risk of annoying people above, it’s not just Clegg who misunderstood the QE and economics generally. In 2010 I had only just begun to follow the arguments about national debt and wondered how he could make a promise abolishing fees in an economic crisis-unless they went for a graduate tax.
In 1931 the Labour Prime Minister, Ramsey McDonald, thought there was no alternative to the cuts. That’s what the economic experts told him and he believed them. McDonald was a great example of social mobility( even the American dream!) illegitimate son of district nurse, he rose to be Prime Minister in the time when the class system was very strong. he was reviled in the same way Clegg is now but he was not a bad man.
Krugman, in the book End this Depression Now bemoans the fact that lots of economists who should know better are making inaccurate statements about the way governments raise and spend money.
Sadly, bad things are done by people whose intentions is to improve things. I think that is true of the Lib Dems I know.
And there are those who just don’t care…they say things like ‘why don’t these people take responsibility for their lives’ meaning they want unemployment benefit, health care and pensions.
To conclude your blog does a great service to explaining what really happens. Even the Guardian and the Independent seem somewhat lacking in their analyses by comparison.
But who the Hell are he Mont Pelerin society? ( in your answer to Ivan)

“The Mont Pelerin Society is composed of persons who continue to see the dangers to civilized society outlined in the statement of aims. They have seen economic and political liberalism in the ascendant for a time since World War II in some countries but also its apparent decline in more recent times. Though not necessarily sharing a common interpretation, either of causes or consequences, they see danger in the expansion of government, not least in state welfare, in the power of trade unions and business monopoly, and in the continuing threat and reality of inflation”

In short, a liberal/conservative society.

In these times I find it remarkable that some fail to appreciate that this government has planned all that they are doing now, for years prior to attaining government.
Or that they are merely puppets, with anothers hand placed in their posteriors, dictating their movements.
And I prefer this version of that “apology”:

Thank you John M
I did not appreciate the extent of the Tory move to the right before 2010-not being a follower of their debates and having other things to do. Also ‘conspiracy theories’ abound and I am as sceptical of the sweeping statements of those on the left as i am on the right.

On present information and actions: both Cameron and Clegg are glove-puppets.
This governments ACTIONS, if not its rhetoric and election pledges [lies], are to the right of Thatcher.
At least Thatcher was transparent, the present government continually says one thing and does another.
I’m quite sure that Virgin, Seeco, Capita and a large variety of other public-money sponges have planned this for a decade or more.
Personally, I would like Lbaour to say that they would not honour contracts signed by this government. They couldn’t of course, but I would love to witness the aftermath of the statement.